The Southeast Asian country seeks to harness more of its raw material reserves for domestic use and become a leading producer of rare earths.
Historically, Malaysia’s role in the rare earth industry has been centered around hosting the largest refinery outside of China, operated by the Australian company Lynas. However, the Southeast Asian nation now aims to develop its own rare earth production capacity, increasing extraction from its largely untapped reserves—currently, only about 80 tons (PDF) of rare earths are mined annually. Until now, Malaysia has lacked a complete value chain for processing these critical materials after extraction. To fill this gap, Economic Minister Rafizi Ramli announced plans to build two processing plants within the next three years, the Malayan Reserve reported. These projects will be supported by investments in infrastructure and strategic partnerships. Just this week, Malaysia signed a cooperation agreement with South Korea on this matter (we reported).
China: Both Competitor and Partner
Without developing its own rare earth industry, Malaysia risks exporting its raw materials at low prices to China, warned Minister Ramli. Such a scenario could result in the rapid depletion of its rare earth deposits and the loss of valuable investment opportunities. In response, Malaysia is turning to China’s expertise to help build its own rare earth industry and develop a local value chain.
To encourage domestic processing, Malaysia has also implemented an export ban on raw rare earths, aiming to increase the value of exports by sending processed materials abroad. However, this move has faced resistance from local state governments, which currently receive royalties from exporting unprocessed raw materials. According to Free Malaysia Today, state governments may pressure the central government to reconsider the policy if the new processing plants are not completed within the three-year timeline.
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